A bill to protect 2020 recovery rebates for individuals from assignment or garnishment, and for other purposes.

116TH CONGRESS 2D SESSION S. 3841 AN ACT To protect 2020 recovery rebates for individuals from assignment or garnishment, and for other purposes. Be it enacted by the Senate and House of Representa- 1 tives of the United States of America in Congress assembled, 2 2 † S 3841 ES SECTION 1. PROTECTION OF 2020 RECOVERY REBATES. 1 (a) IN GENERAL.—Subsection (d) of section 2201 of 2 the CARES Act (Public Law 116–136) is amended— 3 (1) by redesignating paragraphs (1), (2), and 4 (3) as subparagraphs (A), (B), and (C), and by mov- 5 ing such subparagraphs 2 ems to the right, 6 (2) by striking ‘‘REDUCTION OR OFFSET.—Any 7 credit’’ and inserting ‘‘REDUCTION, OFFSET, GAR- 8 NISHMENT, ETC.— 9 ‘‘(1) IN GENERAL.—Any credit’’, and 10 (3) by adding at the end the following new 11 paragraphs: 12 ‘‘(2) ASSIGNMENT OF BENEFITS.— 13 ‘‘(A) IN GENERAL.—The right of any per- 14 son to any applicable payment shall not be 15 transferable or assignable, at law or in equity, 16 and no applicable payment shall be subject to, 17 execution, levy, attachment, garnishment, or 18 other legal process, or the operation of any 19 bankruptcy or insolvency law. 20 ‘‘(B) ENCODING OF PAYMENTS.—As soon 21 as practicable, but not earlier than 10 days 22 after the date of the enactment of this para- 23 graph, in the case of an applicable payment 24 that is paid electronically by direct deposit 25 through the Automated Clearing House (ACH) 26 3 † S 3841 ES network, the Secretary of the Treasury (or the 1 Secretary’s delegate) shall— 2 ‘‘(i) issue the payment using a unique 3 identifier that is reasonably sufficient to 4 allow a financial institution to identify the 5 payment as an applicable payment, and 6 ‘‘(ii) further encode the payment pur- 7 suant to the same specifications as re- 8 quired for a benefit payment defined in 9 section 212.3 of title 31, Code of Federal 10 Regulations. 11 ‘‘(C) GARNISHMENT.— 12 ‘‘(i) ENCODED PAYMENTS.—In the 13 case of a garnishment order received after 14 the date that is 10 days after the date of 15 the enactment of this paragraph and that 16 applies to an account that has received an 17 applicable payment that is encoded as pro- 18 vided in subparagraph (B), a financial in- 19 stitution shall follow the requirements and 20 procedures set forth in part 212 of title 21 31, Code of Federal Regulations, except a 22 financial institution shall not, with regard 23 to any applicable payment, be required to 24 provide the notice referenced in sections 25 4 † S 3841 ES 212.6 and 212.7 of title 31, Code of Fed- 1 eral Regulations. This paragraph shall not 2 alter the status of applicable payments as 3 tax refunds or other nonbenefit payments 4 for purpose of any reclamation rights of 5 the Department of Treasury or the Inter- 6 nal Revenue Service as per part 210 of 7 title 31 of the Code of Federal Regula- 8 tions. 9 ‘‘(ii) OTHER PAYMENTS.—If a finan- 10 cial institution receives a garnishment 11 order, other than an order that has been 12 served by the United States or an order 13 that has been served by a Federal, State, 14 or local child support enforcement agency, 15 that has been received by a financial insti- 16 tution after the date that is 10 days after 17 the date of the enactment of this para- 18 graph and that applies to an account into 19 which an applicable payment that has not 20 been encoded as provided in subparagraph 21 (B) has been deposited electronically or by 22 an applicable payment that has been de- 23 posited by check on any date in the 24 lookback period, the financial institution, 25 5 † S 3841 ES upon the request of the account holder, 1 shall treat the amount of the funds in the 2 account at the time of the request, up to 3 the amount of the applicable payment (in 4 addition to any amounts otherwise pro- 5 tected under part 212 of title 31, Code of 6 Federal Regulations), as exempt from a 7 garnishment order without requiring the 8 consent of the party serving the garnish- 9 ment order or the judgment creditor. 10 ‘‘(iii) LIABILITY.—A financial institu- 11 tion that acts in good faith in reliance on 12 clauses (i) or (ii) shall not be subject to li- 13 ability or regulatory action under any Fed- 14 eral or State law, regulation, court or other 15 order, or regulatory interpretation for ac- 16 tions concerning any applicable payments. 17 ‘‘(D) DEFINITIONS.—For purposes of this 18 paragraph— 19 ‘‘(i) ACCOUNT HOLDER.—The term 20 ‘account holder’ means a natural person 21 whose name appears in a financial institu- 22 tion’s records as the direct or beneficial 23 owner of an account. 24 6 † S 3841 ES ‘‘(ii) ACCOUNT REVIEW.—The term 1 ‘account review’ means the process of ex- 2 amining deposits in an account to deter- 3 mine if an applicable payment has been de- 4 posited into the account during the 5 lookback period. The financial institution 6 shall perform the account review following 7 the procedures outlined in section 212.5 of 8 title 31, Code of Federal Regulations and 9 in accordance with the requirements of sec- 10 tion 212.6 of title 31, Code of Federal 11 Regulations. 12 ‘‘(iii) APPLICABLE PAYMENT.—The 13 term ‘applicable payment’ means any pay- 14 ment of credit or refund by reason of sec- 15 tion 6428 of the Internal Revenue Code of 16 1986 (as so added) or by reason of sub- 17 section (c) of this section. 18 ‘‘(iv) GARNISHMENT.—The term ‘gar- 19 nishment’ means execution, levy, attach- 20 ment, garnishment, or other legal process. 21 ‘‘(v) GARNISHMENT ORDER.—The 22 term ‘garnishment order’ means a writ, 23 order, notice, summons, judgment, levy, or 24 similar written instruction issued by a 25 7 † S 3841 ES court, a State or State agency, a munici- 1 pality or municipal corporation, or a State 2 child support enforcement agency, includ- 3 ing a lien arising by operation of law for 4 overdue child support or an order to freeze 5 the assets in an account, to effect a gar- 6 nishment against a debtor. 7 ‘‘(vi) LOOKBACK PERIOD.—The term 8 ‘lookback period’ means the two month pe- 9 riod that begins on the date preceding the 10 date of account review and ends on the 11 corresponding date of the month two 12 months earlier, or on the last date of the 13 month two months earlier if the cor- 14 responding date does not exist.’’. 15 (b) EFFECTIVE DATE.—The amendments made by 16 this section shall take effect on the date of the enactment 17 of this Act. 18 Passed the Senate July 23, 2020. Attest: Secretary. 116TH CONGRESS 2D SESSION S. 3841 AN ACT To protect 2020 recovery rebates for individuals from assignment or garnishment, and for other purposes.